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When it comes to adopting conservation, soil health and nutrient management practices on rented farmland, experts recommend moving beyond a handshake agreement to a more formal lease. Such practices are long-term investments that require a long-term relationship between tenant and landowner.
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Debbie Oberreuter and her husband, Todd, bottle-feed beef calves on their farm in Powersville, Mo. When the Oberreuters moved here in 1999 from Cedar Rapids, Iowa, renting land was the best option to start their row-crop and livestock operation. They now farm 1,175 acres, all of which is leased from 11 different landlords.
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Ray Massey, University of Missouri Extension professor of agricultural economics, is among a team of researchers studying how stewardship values can be incorporated into farmland leases. This research is timely, considering the recent push for more climate-smart practices, which are often lacking on rented ground.
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Restored cattle farms make up about 75% of the rented acreage on which Todd Oberreuter raises corn, soybeans and wheat. Each lease is a written contract with three- to five-year terms. Oberreuter said forging solid relationships with landlords gives him the confidence to make longer-term investments in the land, such as enrolling in Carbon by Indigo and Nutri-Track programs through his local MFA in Lineville, Iowa.
When it comes to adopting conservation, soil health and nutrient management practices on rented farmland, experts recommend moving beyond a handshake agreement to a more formal lease. Such practices are long-term investments that require a long-term relationship between tenant and landowner.
Debbie Oberreuter and her husband, Todd, bottle-feed beef calves on their farm in Powersville, Mo. When the Oberreuters moved here in 1999 from Cedar Rapids, Iowa, renting land was the best option to start their row-crop and livestock operation. They now farm 1,175 acres, all of which is leased from 11 different landlords.
Ray Massey, University of Missouri Extension professor of agricultural economics, is among a team of researchers studying how stewardship values can be incorporated into farmland leases. This research is timely, considering the recent push for more climate-smart practices, which are often lacking on rented ground.
Restored cattle farms make up about 75% of the rented acreage on which Todd Oberreuter raises corn, soybeans and wheat. Each lease is a written contract with three- to five-year terms. Oberreuter said forging solid relationships with landlords gives him the confidence to make longer-term investments in the land, such as enrolling in Carbon by Indigo and Nutri-Track programs through his local MFA in Lineville, Iowa.
Todd Oberreuter farms 1,150 acres of row crops and 25 acres of pasture in north-central Missouri, and he doesn’t own any of it. Every acre is rented.
But that hasn’t stopped him from treating the land as if his name were on the property deeds. Oberreuter recently planted 200 acres of cover crops and enrolled in the Carbon by Indigo program through MFA. He’s grid-sampled about half the acreage he farms with MFA’s Nutri-Track precision program. He has installed grass waterways, built diversion dams to help control erosion and plans to put in drainage tile in some of the most flood-prone fields.
“I’ve always been taught to leave things better than when I got them,” Oberreuter said. “I want to implement these types of practices because they add value to the land, they add value to me as a tenant, and they add value to the landlord.”
Making such investments in rented acres may seem risky, but Oberreuter and his wife, Debbie, don’t feel that way. They say they work to cultivate solid relationships with their landlords, and, in fact, prefer to call them “partners.” Most of their leases are for three to five years, and the terms are all in writing so that expectations are clear.
“Before we rent a piece of ground, the first thing we do is interview the landlord and decide if we want to work with him. Whether you have 40 acres or 400 acres to lease, you’re still going to be a partner with us,” Oberrueter said. “If we can’t get along in that first interview, we just get up from the table. I want people to be treated like I want to be treated.”
This type of relationship is the foundation for the commitment needed when it comes to boosting adoption of conservation, soil health and fertility management practices. Unfortunately, not all tenant-landowner relationships follow Oberreuter’s example. Most farmland leases are verbal, year-to-year agreements, according to Ray Massey, University of Missouri Extension professor of agricultural economics.
“There is tremendous interest in long-term conservation practices right now, but most leases are oral and annual,” Massey said. “What’s interesting, though, is that statistics show that over 60% of them have been in effect for more than five years.
So those tenants and landowners really do have long-term leases, it’s just that they don’t have assurance of a long-term lease. Can that be overcome?”
It’s a big question, considering that nearly 40% of U.S. farmland—some 350 million acres—is rented or leased from agricultural landowners, according to the American Farmland Trust. It’s also an important question affecting programs designed to address food security and climate change.
“Conservation within leases is a hot topic because the government is stressing sustainability, regenerative agriculture, green ag, whatever you want to call it,” said Landry Jones, MFA conservation grazing specialist. “There’s more information and funding available than there ever has been for practices aimed toward those goals. We’re going to see more and more of those conversations taking place between landowners and tenants.”
One challenge is the fact that most rented ground is owned by non-operators who often live hundreds or thousands of miles away and may not have farming experience or knowledge. For example, Oberreuter is currently working with 11 different landlords who own property in Sullivan and Putnam counties in a 15-mile radius from his home in Powersville, Mo. He said they all have different backgrounds and reasons for leasing their land for farming, from hunters and investors to widows and retired farmers.
Among those landlords is Don Marshall, who moved from northern Illinois and bought property near Unionville, Mo., in 2015. In choosing a farmer-tenant to lease his land, Marshall said the priority is assuring their management goals align.
“I want my land taken care of, so I need somebody with the same philosophy—somebody who’s going to treat my farm like it was their own,” he said. “That means I need to know who they are as a person and build a good, long-term relationship, something we work on over time.”
The attitudes of landowners such as Marshall are currently being studied by Massey and a team from MU and the University of Alabama. In particular, they’re researching how agricultural land leases influence stewardship practices. So far, they’ve found that farmer-tenants are often reluctant to adopt conservation practices because they fear losing access to rented land or feel that high cash rental rates make it impractical. Others are unsure about lease security and landlord support.
Often, however, these fears are unfounded. A 2020 survey conducted by the American Farmland Trust suggests there are several factors more important to the non-operator landowner than financial considerations, and many revolve around conservation. The MU Extension researchers confirmed those findings through five focus groups conducted in 2021 and 2022 with 37 non-operator landowners in Missouri.
“I went into this research thinking that the landowners were probably most interested in their annual rental payment,” Massey said. “We found that money is important but not the only important thing. Many said they would sacrifice a little income to see the value of increased wildlife habitat or soil protection for a long-term benefit on their land. I don’t think that’s really understood in a lot of tenant-landowner relationships.”
The next step in the research involves a nationwide survey of non-operator landlords—if Massey and his team can access them. Such a list doesn’t exist, he said, underscoring just how difficult it is to examine farmer-landlord relationships.
Ultimately, Massey said, the project should help identify ways to foster better incorporation of environmental and social stewardship into agricultural lease agreements.
“To make any real headway in achieving climate-smart objectives, we have to get landowners and tenants working together,” Massey said. “Can we alleviate some of the barriers? Our hypothesis is that we just need to pave the road for those decisions to be made.”
The project is still a few years from completion, but, in the meantime, here are some general considerations for landowners and tenants if conservation, soil health and nutrient management practices are among their goals.
PICK THE RIGHT PARTNER
Longer-term relationships are necessary when a tenant or landlord wants to participate in some type of conservation, precision agriculture or carbon sequestration program. And if those parties are going to enter into a long-term relationship, it needs to be a good relationship, Massey said.
“It’s much more a people business than they may understand,” he said. “It’s important to know each other’s goals and values, not just how much the rental price is going to be.”
Oberreuter’s method of interviewing potential landlords follows this advice, and it’s a process that can go both ways. A landlord may be wise to talk with several interested farmers before choosing a tenant, Massey said.
“Farmers may even want to have a resume that explains your farming experience, goals, equipment, skills, things like that,” he said. “It’s a good way to introduce yourself to landlords, just to let them know you’re a serious farmer.”
NEGOTIATE LONGER LEASES
Along those lines, agreements that extend beyond one year are more conducive to conservation practices and nutrient management programs, both of which are longer-term investments. A lengthier agreement allows both parties to share risks associated with trying something new, such as adopting cover crops.
“Conservation practices don’t have an immediate payoff,” Jones said. “Sometimes they have a five-to-10-year window until they’re really going to be beneficial. If ground is changing hands every few years, it’s hard to make that investment. Having more long-term relationships between farmers and landlords would benefit conservation.”
WRITE IT DOWN
Though verbal agreements are most common, they leave plenty of room for misunderstanding and miscommunication, Massey said. A written lease helps alleviate those concerns.
“A long-term conservation practice such as putting in grass waterway or riparian zone probably needs to be written down as to how the expenses will be handled, especially if the tenant could lose access to the land before the benefit is realized,” Massey said. “If you insist on maintaining a verbal agreement, I would probably emphasize short-term conservation, such as a cover crop or no-till or something of that nature.”
DO YOUR HOMEWORK
When it comes to getting involved in more complicated programs such as carbon sequestration or precision agriculture, education is important, Jones said, and it’s a two-way street.
“One of the biggest barriers to successful adoption of these practices is just a lack of knowledge on both sides,” he said. “The landowner or tenant may not know what programs are available, and they may not know the economic, environmental and biological impacts. There also needs to be better communication from the conservation planners to include both the farmer and landowner, because they all have to be on board.”
No matter who broaches the subject, Jones recommends being informed as possible, not just about the intended benefits but also details such as implementation and estimated cost.
“Be clear on who will establish the practices, who will pay for them, and how to compensate for land taken out of production,” he said. “Those conversations need to be had up front.”
CHOOSE THE RIGHT ACRES
One point of contention when it comes to implementing conservation practices is the reluctance to take profitable farmland out of production, Jones said. However, marginal ground is often most suitable for these programs, and these scenarios can benefit both landowners and tenants. For example, he said, some cost-share programs specifically target unproductive acres and provide funds for establishment and maintenance as well as an annual payment.
“Using precision agriculture, you can look at areas that are losing money each year, such as field edges, and enroll those acres in a conservation program that would actually yield more profit than farming them,” Jones explained. “Putting these practices on the right acre could make a big difference.”
CALL IN THE EXPERTS
As lease agreements get more complex, involving a property management company may offer value, Massey said. These services bring neutrality and unbiased guidance to leasing decisions, he said, but admittedly, the idea isn’t always popular.
“It’s a double-edged sword,” he said. “The farm management company usually takes a percentage from the landowner, so they want the rent to be as high as possible. And if the landowner has conservation goals, I’m not sure those are taken into account. However, the management company has expertise that a lot of individuals don’t have. They have a role to play, but they also need to be educated in the value of stewardship.”
COMMUNICATE, COMMUNICATE, COMMUNICATE
Clear, consistent communication is essential to starting and sustaining a healthy relationship between a tenant and landlord, and that’s especially true when conservation, soil health and nutrient management practices are involved, Massey said.
“Anything that’s complicated can’t be communicated quickly,” he said. “Don’t show up with the fall check and say, ‘I want to enroll in a carbon credit program next week.’ You need to have a longer conversation and provide more information before that type of decision can be made.”
In all communications involving rented land, be sure to follow one of the cardinal rules: know your audience, Massey added. Gauge how frequently landowners would like to receive updates and how they prefer to hear from you.
“If you’re talking to an 80-year-old lady, she probably isn’t on Snapchat,” he said. “She may want a phone call or a personal visit. If the landowners are retired farmers, they may want details such as which hybrid or herbicide you’re using. Regular communication throughout the year gives landlords peace of mind, and anecdotal research shows they are much more inclined to have a long-term relationship with this type of tenant.”
Over decades of experience in exclusively farming rented acreage with multiple landlords, Oberreuter said he’s learned that communication is undoubtedly the single-most important factor in building secure leasing relationships that allow for long-term stewardship investments.
“I’m always upfront with my landlords. I don’t hide anything,” he said. “I field six to eight calls a week from them, and they might want to talk anything from markets to the price of land to what’s happening with Mexico—not just their farm. I never feel like I’m alone in the relationship, and I don’t want them to feel like they’re alone in it, either. It’s a win-win situation for us both, and it seems to get better every year.”
MU Extension offers many resources on farmland leases online at extension.missouri.edu, including tips for building a farm resume and communicating with landowners. Another valuable resource is aglease101.org, which has an extensive library of forms, worksheets and publications.
